An inheritance tax is a state tax paid by the person who receives an inheritance, based on what they received and how they were related to the person who died. There’s no federal version, and most states don’t have one either. Checking inheritance tax by state comes down to five places: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Avoiding probate doesn’t mean avoiding this tax. If you’ve looked up the JT TEN meaning on a statement, you know jointly titled accounts pass straight to the surviving owner. Pennsylvania still taxes the deceased owner’s share of joint assets when the survivor isn’t a spouse.
The five states with an inheritance tax in 2026
Every one of these states fully exempts a surviving spouse. Beyond that, rates depend on how closely you were related.
| State | Fully exempt | Rates for everyone else |
| Pennsylvania | Spouse | 4.5% for children, grandchildren, and parents; 12% for siblings; 15% for others |
| Kentucky | Spouse, parents, children, grandchildren, siblings | 4% to 16% (graduated) |
| Maryland | Spouse, children, grandchildren, parents, grandparents, siblings | Flat 10% |
| Nebraska | Spouse | 1% for close family over $100,000; 11% for aunts, uncles, nieces, nephews over $40,000; 15% for others over $25,000 |
| New Jersey | Spouse, children, grandchildren, parents, grandparents | 11% to 16% for siblings and children-in-law after $25,000; 15% to 16% for others |
Pennsylvania knocks 5% off the bill if you pay within three months of the death, and Kentucky offers the same discount for payment within nine months. Life insurance paid to a named beneficiary is generally exempt, but check the specific state.
Iowa used to be on this list but ended its tax for deaths starting in 2025. Nebraska may follow. A 2025 bill to cut its rates failed, and a state senator is now leading a new repeal effort, with the outcome likely tied to the November 2026 election.
Whose state counts: yours or theirs?
The deceased person’s state decides, not yours. A Texas resident inheriting from an aunt in Pennsylvania can still owe Pennsylvania tax. Real estate is the exception worth watching: a house located in a taxing state can be taxed there even if the owner lived elsewhere.
How much relationship changes the bill
Here’s a hypothetical. A niece inherits $100,000 from her aunt. Depending on where the aunt lived:
- Pennsylvania: $15,000 (15%, no exemption)
- New Jersey: $15,000 (15% for Class D heirs, no exemption)
- Maryland: $9,900 (10% after a $1,000 exemption)
- Nebraska: $6,600 (11% after a $40,000 exemption)
- Florida, or any of the other 45 states: $0
Had the aunt’s son inherited instead, he’d owe nothing in Maryland or New Jersey. For a broader look at what to do with an inheritance that size, see our guide “i inherited 100k what should i do.”
The tax covers more than cash and property. If someone dies while still receiving annual lottery installments, the remaining payments can pass to heirs, and a lottery annuity calculator helps estimate what that stream is worth today.
Inheritance tax vs. estate tax
Estate tax is charged to the estate before anything is distributed, and the federal version only applies above $15 million per person in 2026. Inheritance tax falls on the heir and ignores how large the estate was, so a modest inheritance can be taxed while a much larger estate owes nothing.
Mistakes that cost heirs money
- Assuming your own state’s rules apply when the deceased lived somewhere else.
- Missing Pennsylvania’s three-month window and losing the 5% discount.
- Assuming the executor handles it. Some wills direct the estate to pay inheritance taxes, but if yours doesn’t, the bill is yours. Ask the executor early.
- Confusing this with income tax. Inheritances generally aren’t income, but selling inherited assets later can trigger capital gains tax.
What to do if you might owe
Begin with two statements: Where did the person live? How were you related? Most heirs simply need to wait five minutes until that happens, as most people inherit through an exempt category or from someone who does not belong to these five states. If you are still owing, you should reach out to the executor to determine who is paying, when the filing deadline is, and if the early payment discount applies in your state.
Looking up the inheritance tax by state is an easy task, but there can be difficulties to plan around, particularly when the estate also has property in another state or if it involves a large inheritance. A fee-only financial advisor, in conjunction with an estate attorney in the state of origin, can assist you with planning the remaining inheritance and timing payments.
This article from Windfall Advisors is general information, not tax or legal advice. State laws change, and Nebraska’s in particular may shift soon, so confirm current rules with the state’s revenue department before filing.